The Limitations of Block Grants:

Why Medicaid Reform Requires a Revival of Marriage

That Medicaid is in crisis, few will dispute. Total Medicaid expenditures reached $373.9 billion in 2009 (15 percent of all national health expenditures), up dramatically from $200.5 billion in 2000, from $73.7 billion in 1990, and from just $26.0 billion in 1980.[1] Even appropriate adjustments for inflation cannot hide the runaway escalation in Medicaid costs. As the nation’s largest mean-tested, state-administered welfare program, Medicaid is now wreaking havoc with federal and even more with state budgets.

No wonder that the news media have been filled in recent years with accounts of how the Medicaidcrisis is driving state and local officials “to financial desperation,” compelling them to raising taxes, close libraries, and cut other programs as they struggle to balance their budgets. Some states now see half their revenue going to cover their mandated share of Medicaid expenses. “For us,” lamented one county official in New York, “Medicaid has gone very quickly from a problem, to a big problem, to a disaster.”[2] Moreover, in late 2010, the National Governors Association and the National Association of State Budget Officers issued a Fiscal Survey of States warning that “a combination of lagging revenues, withdrawal of federal stimulus budgetary support and rising Medicaid caseloads” would put states on the edge of a “fiscal cliff” by 2012.

And far worse lies in store: as of June 2011, the Centers for Medicare and Medicaid Services forecasts an annual growth rate of 7.9 percent in Medicaid expenditures, well above the inflation rate, through 2019. But ObamaCare will make even this sobering estimate laughably low with its mandates requiring states to expand Medicaid coverage to everyone living in a household with income below 138 percent of the federal poverty level. Consequently, Texas Governor Rick Perry was simply stating the obvious when he declared in 2010 that “the current Medicaid system is financially unsustainable for states and the federal government,” expressing fears that the financial burdens of this system will “strangle” taxpayers under ObamaCare.

The Conservative Solution

In the conservative response to this dire situation, “block grants” have established themselves as the primary—almost the only—policy recommendation. Without a doubt, significant advantages do accrue to block grants. As annual allotments of money from the federal government to the states, with minimal regulation as to how the states allocate that money, such grants give states considerable flexibility in running the Medicaid program, opening opportunities for innovative arrangements to maximize efficiency and minimize waste and fraud in the Medicaid system. Advocates of such grants thus have good reason to highlight the potential for reaching “the goals of greater federalism and federal funding predictability.”[3] As an example of how block grants might actually work to contain Medicaid costs, some conservative analysts have been touting the outcomes of a state-level experiment in Rhode Island, where in 2009 state officials negotiated with the federal Centers for Medicare and Medicaid Services a special arrangement—that is a waiver allowing departure from normal federal policy—capping federal expenditures on Medicaid in the state at $12 billion through 2013, making the state responsible for costs above that but giving the state exceptional flexibility in administering the program.

Recognizing the fiscal advantages they might realize through block grants, governors—particularly Republican governors—have for a number of years championed block-grant proposals, while carefully avoiding using the term in efforts to build broader political support, that would give them “complete flexibility in defining the amount, duration, and scope of services” delivered under Medicaid and would grant them “complete authority” to establish their own Medicaid payment rates for health-care providers “without interference from the Federal Government” and would authorize them—without federal approval—to enroll Medicaid recipients in health maintenance organizations.[4]

Such ideas are indeed integral to the budget-reform plan, “Path to Prosperity,” advanced by House Budget Committee chairman, Representative Paul Ryan of Wisconsin, earlier this year. Reprising the themes central to block-grant arguments for years, Brian Blase, a Heritage Foundation analyst, praised Ryan’s proposal for replacing the current “open-ended federal reimbursement with a fixed allotment for each state” in a May 2011 paper: “Allowing states to have the freedom to experiment is consistent with federalism, and it also enables states to be laboratories where they can adopt a variety of policies and learn from each other.” This plan, Blase claimed, would provide “budget certainty at the federal and state levels,” even as it “encourage[d] innovation to better serve the most vulnerable.” What is more, Blase cited Congressional Budget Office figures indicating that it would save about $680 billion between 2012 and 2020.[5]

Blase is not alone in viewing block grants as the solution to the Medicaid crisis. Along with many of his fellow colleagues at other conservative think tanks and the prestigious editorial page of the Wall Street Journal, much of the conservative political establishment is pushing hard for block grants. For example, analysts James C. Capretta and Yuval Levin of the Ethics and Public Policy Center clearly presuppose block grants in their August 2011 appeal for “predictable government budgets” and an end to “open-ended health care entitlements.” However, they go further in outlining principles for putting “genuine health care reform . . . at the core of the Republican case for fiscal sanity,” arguing that such reform must “move [the country] away from central planning and toward a genuine marketplace in health care—with cost-conscious consumers subjecting insurers and providers to competitive pressures.” The insistence on the “discipline of an effective marketplace” is a welcome and necessary complement to block-grant proposals.[6] But a comprehensive conservative approach to the Medicaid crisis must include more.

To be sure, no sober observer would write off block grants and free-market proposals for reforming Medicaid as misguided or unnecessary. They do have merit and need to be a part of the equation. However, to the extent that it feeds upon the epidemic of family fragmentation, the Medicaid crisis will not so easily yield to any narrowly fiscal reform. In the same way that the 1996 transformation of Aid to Families with Dependent Children (AFDC) into a block-grant program known as Temporary Assistance for Needy Families (TANF) did little to reduce out-of-wedlock childbearing or lower demands for means-tested welfare spending, the proposals for block-granting Medicaid will do little to yank at the underlying root: the deterioration of the once-vibrant American social sector, a deterioration that fuels the health-care needs of the “low-income” population. The fact that so many Republican lawmakers are now fixated on block grants and free-market strategies as the be-all and end-all speaks volumes about the uncritical ascendance in the party of “economic conservatives,” “fiscal conservatives” or “libertarians,” whose stunted conservatism rarely transcends budgetary concerns.

If ever there were a policy issue requiring a human understanding of economic forces, or a willingness to concede that the Sexual Revolution has profoundly unhinged the political economy, it is the Medicaid-spending crisis. For as any thorough inquiry into the matter will establish, adverse trends in family life since the 1970s account for a sizable—and growing—fraction of Medicaid costs. The magnitude of medical costs due to family breakdown and the retreat from life-long marriage actually exposes the radical inadequacy of any attempt to reform Medicaid by relying entirely on fiscal solutions and procedural maneuvers. By ignoring critical family patterns that carry very significant fiscal consequences, those who place hope in fiscal solutions in dealing with the Medicaid crisis will, in the final analysis, be disappointed, as such reforms alone will not even deliver the results economic conservatives seek.

Given the importance of family life to the American civilization that the post World War Two conservative movement has sought to preserve, one would assume that self-identified conservatives would want to conserve and protect family life first, last, and always. Yet today’s fiscally oriented conservatives were—strangely—indifferent to family considerations of health-care policy when President Barack Obama and his allies, who are equally indifferent to such matters, were in pushing through Congress the family-adverse expansion of the medical welfare state, popularly dubbed ObamaCare.[7] Moreover, conservatives discussing Medicaid reform today rarely indicate that they understand the extent to which family breakdown feeds public health-care spending. Such aloofness betrays a deeply unfortunate ignorance of a wealth of epidemiological research documenting the heavy health consequences of marriage and family life.

Marriage and Health

“Marriage is a healthy estate,” declared nineteenth-century medical scholar William Farr. “The single individual is more likely to be wrecked on his voyage than the lives joined together in matrimony.”[8] And the evidence supporting Farrs’ assertion has only grown more compelling in the decades since he wrote. “One of the most consistent observations in health research is that married [people] enjoy better health than those of other marital statuses,” reported the authors of a 1985 study, who further noted that “this pattern has been found for every age group (20 years and over), for both men and women, and for both whites and nonwhites.”[9] After parsing data indicating that “being divorced and a non-smoker is [only] slightly less dangerous than smoking a pack or more a day and staying married,” Yale researcher Harold Morowitz jokes facetiously, “If a man’s marriage is driving him to heavy smoking, he has a delicate statistical decision to make.”[10]

The reliability of American studies finding that wedlock fosters good health is bolstered by international data. In a 1990 study of mortality data from sixteen industrialized nations, a Princeton team limned a consistent pattern: mortality rates run distinctively higher among single men and women than they do among married peers. The researchers plausibly conclude that their findings “strengthen previous speculations about the importance of marriage in maintaining health and the increased stresses associated with both the single and the formerly married states.” Policymakers have good reason to accept the researchers’ claim that their findings will hold growing relevance in the years ahead because “for the majority of countries [studied] . . . as well as for both genders, the excess mortality of each unmarried state (relative to married persons) has increased over the past two to three decades.”[11]

More recent twenty-first-century research only underscores the importance of wedlock in enhancing health. Researchers from Penn State and Wayne State Universities acknowledged in a 2000 study that marriage rates have fallen sharply in recent decades even as divorce rates have remained remarkably high. Nonetheless, these researchers insist, “The significance of marriage [in affecting health] has not diminished—marriage has powerful and pervasive health benefits.” “The consistency of the health benefit of marriage, across all domains of health, is remarkable,” they further explain, as they point to this wedlock health benefit among both men and women and among all ethnic groups.[12] The remarkable health advantages of wedlock actually grow as a successful marriage persists over time, as became evident in a 2009 study concluding that a 2009 study published by researchers from Johns Hopkins and the University of Chicago. This study offers “strong support” for the hypothesis that “the short-term effects of marital status . . . extend to the long term and accumulate over the life course.”[13]

No doubt uneasy about their ideological vulnerability on this point, left-leaning sociologists have tried to explain away the statistical linkage between marital status and health, arguing that this linkage is no more than a “selection effect.” They claim, in other words, that married people are distinctively healthier than unmarried peers only because healthier people are more likely to marry than are sick people. Such sophistry will not bear much scrutiny. For the researchers that have delved deepest have uncovered hard evidence that marriage itself confers health benefits. Sociologist Debra Umberson, for instance, has uncovered evidence that marriage and parenthood both enhance good health by providing a system of “meaning, obligation, [and] constraint.” Marital and parental ties thus exert a “deterrent effect on health-compromising behaviors” such as excessive drinking, drug use, risk-taking, and disorderly living.[14]

In line with Umberson’s findings are the conclusions of a 2003 Task Force on Family Health created by the American Academy of Pediatrics: “Marriage is beneficial in many ways,” the AAP task force writes, explaining that “people behave differently when they are married. They have healthier lifestyles, eat better, and mother each other’s health. Being part of a couple and a family also increases the number of people and social institutions with which an individual has contact; this…increases the likelihood that the family will be a successful one.”[15]

Though certainly helpful, studies highlighting the way wedlock fosters good health habits tell only part of the story. For the health advantage of an intact marriage persists even in studies that take differences into account “even marginal differences in health-related behaviors.”[16] Just how deeply the wedlock advantage in health permeates the very biology of married men and women may be inferred from studies linking marital status to “cellular immune system control”[17] and to a beneficial drop in evening (that is, at home) blood pressure.[18]

Nor should anyone suppose that wedlock enhances only physical health. Researchers now widely recognize “a protective effect of marriage on mental health among the general population.”[19] As a UCLA scholar explained, the “therapeutic benefit of marriage” helps account for the fact that rates for alcoholism, suicide, schizophrenia, and other psychiatric problems run lower among the married than unmarried peers. After all, the married man or woman has a “continuous companionship with a spouse who provides interpersonal closeness, emotional gratification, and support in dealing with daily stress.”[20] So it is hardly surprising that studies show that “unmarried persons with and without children have higher levels of depression than married persons with or without children.”[21]

Good Health: A Family Affair

Since Medicaid covers poor children as well as their parents, in most cases single mothers, policymakers should attend not only to research showing that wedlock fosters good health among husbands and wives but also studies indicating that an intact parental marriage protects the health of children. Careful scrutiny of national data establishes that “Marital status is related to the health status of all the family members, including both parents and children.”[22] Predictably enough, then, researchers see the national retreat from wedlock in recent decades translating into “higher rates of poor health and chronic health conditions” among affected children.[23]

Though discernible in the physical health of children, the harm wrought by family disintegration is even more pronounced in their mental health. Indeed, in a 2000 study of the national upsurge in psychological problems among children, researchers limned a correlation between the growing incidence of such problems and the rising number of single-parent families: “Children from single-parent households were roughly twice as likely to be identified with psychosocial problems” as peers in intact families.[24] The heightened vulnerability to mental illness among children from broken homes darkens not just childhood, but adolescence and young adulthood as well. Available data indicate that adolescents from broken homes are “overrepresented among patients at mental-health centers,” accounting for between 50 and 80 percent of the patients in some institutions.[25] Long-term investigations find that even after adolescence, individuals reared in broken homes suffer from a “significantly lower level of general psychological well-being” as young adults than found among peers reared in intact families.[26] An international team of research psychologists interprets the distinctively elevated levels of psychological distress among adults reared in broken homes as evidence that parental divorce often puts children into “negative life trajectories through adolescence into adulthood.”[27]

The raft of research identifying the malign health consequences of family breakup should matter a great deal for policymakers trying to resolve the Medicaid crisis. For these malign consequences of family disintegration translate into dramatically elevated medical costs, many of which end up on being paid by Medicaid. Clarifying the way these costs hit taxpayers, a 2001 British study based on thirty years of data documented, first, that the apparent health advantage that married British subjects enjoy over their married peers “increased dramatically during the 1970s, [and] has been maintained since then.” Second, this study established (unsurprisingly) that married men and women are not only healthier than their unmarried peers but also account for “much lower use of health and social care beds” in hospitals and other such institutions in the United Kingdom.[28] Harvard scholars reached similar conclusions in a 2003 study documenting significantly “shorter lengths of stay” in the hospital for married elderly men and women than for unmarried peers.[29]Given that unhealthy unmarried individuals can rely on no spouse to care for them at home, such an international pattern is entirely understandable.

As early as 1977, when the national retreat from marriage was still gathering steam, a University of Maryland health researcher realized that medical costs were already inflated “uncounted billions of dollars” because divorced and single people were staying in hospitals longer than married people suffering from the same illnesses.[30] Some commentators have tried to brush off the medical costs of family breakdown, arguing that “contrary to stereotype, it’s the elderly and disabled who cost nearly 70 cents of every Medicaid dollar, not the single mother and her children.”[31] But since the dramatic breakdown of American family life began in the firestorm of the 1960s—a half-century ago!—the single mother and her children are rapidly becoming the elderly. And unmarried elderly individuals are both distinctively vulnerable to illness and distinctively unable to remain home when ill.

With good reason, RAND analyst Peter Morrison has warned that trends in American family life may make it difficult to provide medical care for the rising number of elderly Americans. He has noted, in the first place, that because of high divorce rates, “the care spouses traditionally have provided each other in old age will be far less available,” explaining further that a relatively low birth rate and a relatively high female employment rate will make it difficult to maintain a “tradition . . . [in which] adult daughters have provided elderly parents with home care.” The birth dearth will further exacerbate the difficulty of caring for the elderly. Morrison understandably worries about a “demographic scenario” in which “elderly Americans long on life expectancy may find themselves short on care where it matters most—at home.”[32]

Even in areas where the impact of family life on medical expenses might seem minimal, closer inspection reveals that very significant amounts of money are often involved. Thus, for example, studies that find that unmarried mothers are much less likely to breastfeed than married mothers[33] translate into significantly “reduced health-care costs” for the children born to married mothers who give their offspring the immunological protection that breast-feeding confers[34] and into dramatically elevated health-care costs for children born to unwed mothers who fail to give their children such protection, leaving them distinctly vulnerable to a host of problems, especially respiratory illnesses of a sort that often result in costly hospitalization.[35] Researchers thus have good reason to highlight the ways that “breast-feeding decreases health care costs” and to warm that when social patterns result in lower levels of breast-feeding, the result will be that “a greater burden will be placed on Medicaid.”[36]

In a similar way, when growing up in a single-parent home makes children especially likely to become obese[37] or when parental divorce leaves children distinctively vulnerable to stress headaches,[38] these chronic conditions portend a lifetime of health issues carrying more than trivial long-term medical costs. Even so, when divorce or out-of-wedlock childbearing compels mothers to drop off their children at the day-care center while they seek out-of-home employment, they expose their children to significant and often very costly health risks (risks faced by the young children of all too many married mothers, it must be acknowledged, whose employment makes their family life disturbingly similar to that of unmarried mothers). Researchers report that “outbreaks of infectious diseases occur [so] frequently within the day-care setting” that “the elevated risk of acquiring infectious diseases in this setting . . . [is] an important health issue.”[39] It should surprise no one, then, that children dropped off in daycare are hospitalized four-and-a-half times as much as children cared for at home by their mother.[40] Nor should it surprise anyone that, compared to their peers cared for at home, children in daycare are almost twice as likely to have visited an emergency room and almost three times as likely to have received a prescription medicine.[41] And at a time when doctors are especially concerned about the emergence of how overuse of antibiotics is incubating new antibiotic-resistant super-germs, it should disturb health officials that children in daycare are using almost four times as much antibiotics as children cared for at home.[42]

The Need for Comprehensive Reform

The wealth of research linking family life to better health outcomes and to lower health-care costs provides compelling refutation of the thinking of those who suppose the United States can manage her Medicaid crisis through block-grant finesse and marketplace magic alone. Long-term progress in reining in runaway Medicaid costs will require serious commitment to social conservatism in general and a roll back of public policies that have reinforced the Sexual Revolution in particular. For without major efforts to reinforce marriage and family life, Medicaid will continue to spiral out of control, frustrating efforts to bring fiscal sanity to federal or state budgets. Even if the Medicaid program is transformed into block grants, states will still find themselves up against a wall with rising demands for public health-care spending commensurate with family fragmentation. That means that when, for instance, members of Congress stand up for a Defense of Marriage Act that the Obama Administration has repudiated, so undermining wedlock, they are actually working on the Medicaid issue in a constructive way. Federal policymakers could make even more dramatic headway in dealing with that issue by rolling back the policy disasters of the 1970s, including Roe v. Wade, which triggered immediate declines in marriage and birth rates,[43] the foray of Uncle Sam into pushing and dispensing birth control in the face of fertility decline,[44] as well as sex-based affirmative action that undermines the gender complementary that has traditionally sustained wedlock.[45]

State-level policymakers could do their part in helping to resolving the Medicaid crisis by repealing no-fault divorce laws that helped drive up divorce rates by as much as 25 percent[46] and that fostered non-marital cohabitation by undermining faith in marriage as a stable and life-long union.[47] State lawmakers could join forces with congressmen in rolling back the entire range of welfare-state groupthink that has incubated millions of marriage-less “mother-state-child” families[48] and has pervasively served, as one prominent sociologist has acknowledged, to “undermine family values or familism—the belief in a strong sense of family identification and loyalty, mutual assistance among family members and a concern for the perpetuation of the family unit.”[49] And let no one suppose that the architects of the welfare-reform legislation of 1996—with all its provisions for state provision of job training, make-work projects, and daycare subsidies—truly repudiated such thinking.

No doubt, conservative lawmakers at both the federal and the state level can help resolve the Medicaid crisis by coming up with other effective measures for reaffirming wedlock and family life. But let no one suppose that lawmakers at the federal or state level will make much progress in defusing the Medicaid crisis while relying entirely on block grants, market economics, and the other expedients of fiscal conservatism.

James C. Capretta and Yuval Levin, “Unhealthy Debt:Real Health Care Reform is the Only Way Out of our Budget Woes,” The Weekly Standard, August 8, 2011.

See Bryce J. Christensen, “Prescribing Poison: Why ObamaCare Delivers the Wrong Family Medicine,” The Family in America 24.3 (2010): 239–58.

William Farr, “Marriage and Mortality,” Vital Statistics: A Memorial Volume of Selections from the Reports and Writings of William Farr (London, 1885; rpt. Metuchen: The Library of the New York Academy of Medicine/The Scarecrow Press, 1975), pp. 438–31.

Sara McLanahan, “Diverging Destinies: How Children Are Faring Under the Second Demographic Transition,” Demography 41 (2004): 607-27; Julie Scott Taylor et al., “Duration of Breastfeeding Among First-Time Mothers in the United States: Results of a National Survey,” Acta Pediatrica 95 (2006): 980-84.